Rental Payment

Working out a rental budget and ensuring that it is as accurate as possible is of paramount importance. There are a number of things you will need to factor into your calculations and some of these vary based on preferences and in some cases, location.

The main things you will need to factor into your calculations are:

1.       Utilities
2.       Internet access
3.       Telephone lines
4.       Electricity

Depending on the location and the type of property you intend to rent, the above considerations may or may not be included in your monthly rental rate. If you hire a property agent to help with the searching, negotiate to have some of the above costs be absorbed into the rent. Doing so will help lessen the burden on your finances.

Renting is quite cheap in most places in Malaysia, unless you intend to live in central Kuala Lumpur in locations like Jalan Ampang or Bukit Kiara. Despite this however, there are still additional costs you will incur when renting residential property.

Agent Fees

In the event of a sale, the agents’ commission or professional fees are paid by the seller. For rental, this is handled by the landlords. The percentage varies on the duration of the tenancy.

Up to 3 years                                                   : 1.25 months gross rental Exceeding 3 to 4 years                                      : 1.50 months gross rental Exceeding 4 to 5 years                                      : 1.75 months gross rental Exceeding 5 years and without option for renewal : 1.75 months gross rental Exceeding 5 years with option for renewal            : 1.75 months gross rental plus 0.25                                                                         months rental for every extra year

Minimum fee: May be subject to a minimum fee of 1 month’s rental. The above fees do not apply to services offices, apartments or any other property of a similar nature.

Stamp Duty

Stamp duty is paid by the tenant and it is calculated as such;

The annual rate, for example RM700 per month x 12 months = RM8, 400. The first RM2, 400 is exempted from stamp duty therefore you will have to subtract RM2, 400 from RM8, 400. This gives you RM6, 000 and for every RM 250 or part thereof in excess of RM2, 400 there will be chargeable stamp duty.

If the tenancy is 1 year or less, the stamp duty is RM1.00. If it is more than 1 year but is equal or less than 3 years, the stamp duty is RM2.00. If the tenancy exceeds 3 years to an indefinite period, the stamp duty is RM4.00.

This means if your tenancy is for 3 years, your stamp duty is calculated as RM8, 400 – RM2, 400 divided by RM 250 = 24 x 3 years = RM72.

A stamp duty of RM10 is also charged for every copy of the tenancy agreement.

If the period of tenancy is less than RM2, 400, no stamp duty is required.

All stamp duty is payable to the Inland Revenue Board of Malaysia.

Tenancy Agreement

While it is not mandatory for a lawyer to be involved in the drafting of a tenancy agreement, it is nonetheless advisable to hire one. However, due to a conflict of interest, the same lawyer cannot represent both the landlord and the tenant.

Common practice indicates that the person who is expected to pay for the tenancy agreement is the one whom hires the lawyer to draft the agreement. The other party will need to hire his or her own lawyer to look through the draft before the agreement is signed.

Utilities

Utilities, if not included in the rent are to be paid to the landlord every month without fail. Failing to do would result in having basic amenities such as water and electricity cut, not necessarily by the landlord but by the relevant suppliers in Malaysia.

It is always best to include all additional fixed costs into the tenancy or leasing contract prior to signing. If your property agent has negotiated for utility costs to be included in the rent in its entirety, ensure that this is reflected in the contract prior to signing.

Rental fees

Rental fees are determined by the landlord and may be negotiated. These differ in locations. However, it is normal to expect to pay two months rental as a deposit, one month rental as advanced and a utility deposit which is usually set at the same rate as a month’s rental. This is all subject to the landlord/tenant agreement and will differ from person to person.